The European Anti-Fraud Office (OLAF) has uncovered what it calls a "large-scale fraud scheme," involving clothing and shoe imports from China.

OLAF said that a band of Chinese, Hungarian and Austrian citizens had smuggled large quantities of textiles and shoes from China into the EU by means of undervalued and false invoices.

"The actual financial impact in customs duties and VAT in the present case cannot be accurately established yet, as the investigations are ongoing, but will run to millions of Euros," the unit added.

It noted that the discovery, which involved jeans, T-shirts and other clothes as well as various kinds of footwear including sports shoes and casual shoes, was made in co-operation with the Austrian authorities.

The anti-fraud office's investigation alleges that mainly small customs clearance agents were used to do the customs clearance on behalf of Asian citizens, with goods allegedly cleared in the Member State of arrival without paying the VAT and were then transported into another Member State of destination.

According to OLAF's findings, this type of alleged fraud, called false origin and value declarations, appears to be a Europe-wide phenomenon.

It said that several other investigations in different Member States were ongoing.

The overall quantity of textiles and footwear affected by false origin and value declarations until now is at around 600,000 tons, OLAF added, with the overall financial impact for the budget of the European Community estimated to be more than EUR200m in customs duties alone.